MPs summon Duffour… over failure to reduce petrol prices

By Emmanuel Akli

The former Minister of  State at the Ministry of Finance and Economic  Planning, during ex-President Kufuor’s regime, Dr. Akoto Osei, has hinted that the Minister of Finance, Dr. Kwabena Duffour, would soon be summoned to Parliament to explain to Ghanaians why ex-pump prices of petroleum products have not been reduced, when the price of the commodity has dropped on the international oil market.
Logic would seem to dictate that if oil prices are going down, the ex-pump price should follow suit and go down also. However, the opposite has been the case.
According to the former Minister, though the government had already hedged both our oil exports and imports to cushion consumers against the price volatility, the Finance Minister was still insisting that the government was subsidising the product to the tune of GH¢60 million every month.
Akoto Osei, who was speaking in an interview with The Chronicle, contended that the country should now be making gains in the importation of crude, which should lead to the reduction of prices of the product on the local market, but that has not happened.
The Tafo-Pankrono MP did not, however, state when the Finance Minister would be summoned before the House to explain the issue.
Brent Crude was being sold at $94 per barrel yesterday, as against $118 in March this year.
The government, in September last year, hedged both the import and the export prices of the product at $107 per barrel. The idea was to cushion local consumers of the products, and also stabilise the budget revenue.
In 2010, the Finance Minister took a similar decision to take insurance cover for the crude oil imports, which was hedged at $82 per barrel. In an interview he granted to this reporter that year, Dr. Duffour said the decision was the right one, because the government made a profit of $70 million in its hedge books.
But, whilst presenting  the 2012 Budget Statement to Parliament in November last year, Dr. Duffour told Ghanaians that due to high crude oil prices on the international market, the government had subsidised the ex-pump price of petroleum products to the tune of GH¢267.61 million. as at September 30, 2011.
He did not touch on the management of the previous hedging policy, but explained that the commencement of crude oil production had created a new price risk exposure for government revenue, and that in order to protect the revenue, the scope of the hedging programme was expanded in May 2011, to include petroleum revenues.
He indicated to Parliament that Ghana’s share of the crude oil from the Jubilee fields had been hedged at $107.  With the price of the commodity declining to $94 per barrel, and the government having hedged at $107 per barrel, it means that the government is raking in more revenue, but as to why the price had still not come down on the local market remains a puzzle.
A couple of weeks ago, some officials of the International Monetary Fund (IMF) called on President Mills at Castle, Osu, and urged him to remove subsidies on fuel, and also work hard to arrest the fallen cedi.
The bank representative in Ghana has, however, come out to explain at a public forum held in Accra yesterday that they were misquoted, and that they only urged the government to gradually remove the subsidy, which Dr. Akoto Osei is challenging its existence.
A Deputy Minister of Finance, Mr. Seth Terkper told The Chronicle in a text message that the hedge only limits the extent of subsidy and likely price increases. According to him, the government hedged against both upper and lower limits. This, to him, meant that these market prices might still be higher than the local average price needed to pass all costs to consumers.
Meanwhile, an energy expert, Dr. Charles Wereko-Brobby, has challenged claims that the government was subsidising fuel products in the country. Speaking at  a forum organised by ISODEC in Accra yesterday, the former Volta River Authority (VRA) boss said whilst it was true that that government provides some sort of subsidy on some of the petroleum products, the taxes and levies imposed at the same time negate the original subsidy.

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